Yemen Economic Outlook

February 6, 2018

A new front has opened in the civil war in recent weeks, after fierce fighting broke out in Aden between the Saudi-backed government and southern separatists—erstwhile allies against the Houthi rebels—impeding humanitarian operations in the city. The conflict was triggered by the government’s refusal to meet the separatists’ demand of a cabinet reshuffle. More positively, Saudi Arabia has in recent weeks pumped cash into the war-torn country, providing USD 2 billion to the Central Bank to support the currency and announcing a further USD 1.5 billion in aid. However, Saudi Arabia maintains a partial blockade of commercial imports, with fuel in particular struggling to enter the country. Over half the population remains food insecure, and the number of suspected cholera cases stands at over 1 million.

Yemen Economic Growth

The economy should expand this year thanks to international support, although this is subject to a favorable evolution of the civil war. FocusEconomics panelists expect the economy to grow 2.2% in 2018, down 0.7 percentage points from last month’s forecast, and 7.8% in 2019.